Tuesday, November 24, 2015

Recent Transfer: Dominion Resources, Inc.

Founded in 1909 and headquartered in Richmond, Virginia, Dominion Resources, Inc. (NYSE:D) produces and distributes energy, natural gas and related services to customers primarily in the easter region of the United States. Operations are conducted through various subsidiaries, including Virginia Electric and Power Company.

This is the fifth transfer of a stock from my portfolio at Scottrade to DivGro. I'm providing details of past transactions, including buys and dividends received. I'm also explaining why I like the stock and why I want to be a shareholder. These posts are not very elaborate, as I want to complete the process as soon as possible. Later, I'll do a thorough stock analysis of each transferred stock.

I own 36 shares of D with an average buy price of $69.41 and an average yield on cost (YoC) of 3.51%. Since the company increased its dividend after I first bought shares, YoC is not 3.73%.

D pays quarterly dividends of 64.75¢ per share, or $2.59 annualized, in the months of March, June, September and December. Given a share price of $67.58, the stock currently yields 3.83%.

With this transfer, DivGro's projected annual dividend income increases by $93.24 and I'm adding $95.67 of past dividend income. I've received 3.83% of my original investment back in dividends.

Transactions

2014-08-19  Bought: 29 shares of D at $69.17 per share: $ 2,005.97
2014-09-22 Dividend on 29 shares at 60.00¢ per share:  $ 17.40
2014-12-22 Dividend on 29 shares at 60.00¢ per share:  $ 17.40
2015-03-20 Dividend on 29 shares at 64.75¢ per share:  $ 18.78
2015-06-22 Dividend on 29 shares at 64.75¢ per share:  $ 18.78
2015-07-07 Bought:   7 shares of D at $70.41 per share: $ 492.86
2015-09-21  Dividend on 36 shares at 64.75¢ per share:  $ 23.31
                                                                
 Total Capital Invested $ 2,498.83

Total Dividends Received:$ 95.67

My 2 buys are indicated in the chart below. The second buy of 6 shares was at a slightly higher level and rounded out the total capital invested to about $2,500, which is the usual size of my DivGro buys.

Notice that I routinely include commissions to show the true cost basis of buys. Scottrade charges $7 per trade, so when I buy relatively few shares the average share price gets inflated. If commissions were excluded, the average share prices for my buys are $68.93 and $69.41, respectively.

Source: Scottrade

Why D?


Here are some reasons I like D and why I decided to transfer the shares to my DivGro portfolio:
  1. D is a Dividend Contender with a track record of 12 consecutive years of dividend increases. 
  2. The company grows dividends at better than 6% per year. The 5-yr growth rate is 6.5%.
  3. At the current share price of $67.58, the stock yields 3.83% – a good yield for a Utility sector stock. 
  4. According to Morningstar, D has a wide economic moat and exemplary stewardship rating. 
  5. The company is expanding its renewable energy generation capacity through joint ventures.
Do you own shares of D? Do you think the stock is trading at, above, or below fair value? Please share your ideas about D in the comments section below.

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